Correlation Between Franklin High and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Franklin High and Diamond Hill at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Franklin High and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin High Income and Diamond Hill E, you can compare the effects of market volatilities on Franklin High and Diamond Hill and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Franklin High with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin High and Diamond Hill.
Diversification Opportunities for Franklin High and Diamond Hill
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Diamond is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Franklin High Income and Diamond Hill E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill E and Franklin High is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Franklin High Income are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill E has no effect on the direction of Franklin High i.e., Franklin High and Diamond Hill go up and down completely randomly.
Pair Corralation between Franklin High and Diamond Hill
Assuming the 90 days horizon Franklin High is expected to generate 124.67 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Franklin High Income is 1.42 times less risky than Diamond Hill. It trades about 0.0 of its potential returns per unit of risk. Diamond Hill E is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 902.00 in Diamond Hill E on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Diamond Hill E or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin High Income vs. Diamond Hill E
Performance |
| Timeline |
| Franklin High Income |
| Diamond Hill E |
Franklin High and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin High and Diamond Hill
The main advantage of trading using opposite Franklin High and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin High position performs unexpectedly, Diamond Hill can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
| Diamond Hill vs. Artisan High Income | Diamond Hill vs. Aquila Three Peaks | Diamond Hill vs. T Rowe Price | Diamond Hill vs. Franklin High Income |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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